‘BOW’ WOW!
Legal power plays at chic Bowery Hotel
Owners of the trendy Bowery Hotel so infuriated a NY judge with their delay tactics that she has refused to hear their defense in a multimillion-dollar fraud case.
Now it’s time for them to pay up.
Theepic legal struggle over the Lower East Side hot spot — known for entertaining Alisters Gigi Hadid, Jennifer Lopez, Keith Richards and Sting — could now cost its owners up to $50 million.
Bowery partner Gerald Rosengarten stands to pocket the dough thanks to the judge’s frustration with the glam inn’s majority owners, powerhouse New York hoteliers Richard Born and Ira Drukier and their partners, restaurateurs Sean MacPherson and Eric Goode.
Rosengarten sued the men in 2014 claiming that they used dirty tricks to squeeze him out of a deal to sell the hotel’s luxurious penthouse suite and other apartments — and then cut off his recurring revenue payments in retaliation for the suit.
But instead of defending themselves with evidence, the owners played judicial mind games that had a Manhattan Supreme Court judge so enraged she took the rare step of striking their answers to Rosengarten’s 2014 lawsuit.
That move sent the case straight to the damages phase, which is playing out now.
“It looks like in this case the defendants did everything possible not to follow these court orders,” then-Judge Shirley Werner Kornreich said in siding with Rosengarten in 2017. “The real issue for me is the absolute disdain that the defendant showed to the court rules, and to the court, time and time again.”
The delay tactics were intended to force Rosengarten to drop his case or settle because he couldn’t afford to wait for trial, especially after the defendants had cut off his funding, his lawyers argued at the time.
The judge agreed and her decision to strike their answers — which basically left them without a defense — was upheld by an appeals court in 2018.
Now the battle is playing out through damages hearings that kicked off late last year. The hearings are before a court-appointed referee whowill make recommendations to Judge Jennifer Schecter.
Observers say the longrunning battle could finally end in the fall.
The Bowery is the crown jewel of Born and Drukier’s fast-expanding BD Hotels empire, which boasts 28 highprofile venues. It’s a frequent scene of celeb notoriety — such as Cuba Gooding Jr.’s public meltdown in the lounge over his sex-harassment case, Page Six reported in June.
Rosengarten’s lawyer, Craig S. Kesch of Ganfer Shore Leeds & Zauderer, declined to comment.
The Born team’s lawyer, Robert D. Goldstein of Epstein Becker & Green, did not respond to phone calls and emails.
The lawsuit filing in 2014 and Judge Kornreich’s angry warnings to the defendants in 2015 were widely reported, but the case dropped off the media radar after that.
Agroundleaseis at the crux of the battle. TheBoweryHotel was built on land owned by a different company, Woodcutters Realty Corp.
Rosengarten’s partners in 2011 bought Woodcutters without him — a deal that made them the hotel’s landlord, and which Rosengarten called “fraudulent” in a 2014 lawsuit.
A main effect of his hotel partners’ leaving him out of the land deal is that it cuts him out of future profits when the ground lease expires in 2053 — when the ground and the hotel become a single piece of property.
Real estate investor Rosengarten — a former fashion designer “credited” with inventing the 1970s leisure suit — teamed up with the Born group to develop the Bowery Hotel starting in 2002.
The ground lease remains in effect because Born, Drukier, MacPherson and Goode didn’t buy the land directly from Woodcutters in 2011, but rather, bought all of the company’s stock.
That amounted to “stealing the acquisition,” Rosengarten claimed.
Cutting Rosengarten out of the land deal also blocked him from converting several upper floors to condos.
Now, the sides are fighting over how to value the land and the hotel when the ground lease expires 34 years from now, and how much the condos — now rental apartments — would have fetched had Rosengarten been able to sell them.
“The Born people are in a pickle,” a close observer of the proceedings said. “To pay Rosengarten the least in damages, they’ll try to show that the property will be worth much less in 2053” than Rosengarten’s side says it’s worth. “But that devalues the property until then,” the observer said.